General Motors Co (GM) said on Thursday that it has forced out 15 employees for their role in the deadly ignition-switch scandal and is to set up a compensation fund for crash victims, as an internal investigation blamed the debacle on engineering ignorance and bureaucratic dithering, not a deliberate cover-up.
GM took more than a decade to recall 2.6 million cars with bad switches that are now linked to at least 13 deaths by the automaker’s count.
“Group after group and committee after committee within GM that reviewed the issue failed to take action or acted too slowly,” Anton Valukas, the former federal prosecutor hired by the automaker to investigate the reason for the delay, said in a 315-page report.
Photo: Reuters / John F. Martin for General Motors
“Although everyone had responsibility to fix the problem, nobody took responsibility,” it said.
GM CEO Mary Barra said more than half the 15 employees forced out were senior legal and engineering executives who failed to disclose the defect and were part of a “pattern of incompetence.” Five other employees have been disciplined, she said, without identifying any of them.
The automaker said it is to establish a compensation program covering those killed or seriously injured in the more than 50 accidents blamed on the switches. GM did not say how much money will be involved, but a Wall Street analyst estimated the payouts will total US$1.5 billion.
Barra called the report “brutally tough and deeply troubling.”
The report lays bare a company that operated in “silos,” with employees who did not share information and did not take responsibility for problems or treat them with any urgency.
Valukas also portrayed a corporate culture in which there was heavy pressure to keep costs down, a reluctance to report problems up the chain of command, a skittishness about putting safety concerns on paper and general bureaucratic resistance to change.
He described what was known as the “GM nod,” in which “everyone nods in agreement to a proposed plan of action, but then leaves the room and does nothing.”
Valukas exonerated Barra and two other top executives, Mark Reuss, chief of global product development, and general counsel Michael Millikin, saying there is no evidence they knew about the problems any earlier than December last year.
Since February, GM has recalled 2.6 million older-model Chevrolet Cobalts, Saturn Ions and other small cars because their ignitions can slip out of the “run” position and shut off the engine. That disables the power-assisted steering and brakes, making it difficult to control the car and deactivates the air bags.
Trial lawyers suing the company put the death toll at more than 60.
Last month, GM paid a record US$35 million fine for failing to promptly report the bad ignition switches to US federal highway safety regulators. US federal prosecutors are also investigating and could bring criminal charges against the automaker and some of its employees.
Deep within the company, engineers and others believed the ignition switch flaw was a “customer convenience” issue rather than a safety problem, the report said.
Engineers believed that the cars could still be adequately steered when the engines shut off, and they did not realize the air bags became disabled — even after police, academic experts and others outside GM had recognized the problem, according to the report.
Around GM, engineers were instructed not to use words like “dangerous,” “defect” or “safety” when describing problems in writing, which contributed to the lack of urgency in dealing with the problem, Valukas wrote.
In his report, Valukas said he found no evidence that any employee made “an explicit trade-off between safety and cost” in dealing with the switch.
He said there was “tremendous cost pressure” at GM at the time, and he left open the possibility that it influenced the automaker’s handling of the problem.
Barra, a 34-year GM veteran, told 1,000 employees gathered at the automaker’s suburban Detroit technical center that the report was “enormously painful.”
“I want you to never forget it,” she said in a speech that was also broadcast to the company’s 212,000 employees worldwide.
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